The easiest place to start a relationship with a startup is by piloting their technology as a customer, says Xinjin Zhao, a Senior Technology Scouting and Ventures Advisor at ExxonMobil. But other forms of partnerships also play a key role in his startup engagement strategy.
Zhao is the primary contact with the MIT Industrial Liaison Program (MIT ILP) office, which is one of the channels he uses to scout new startups and to understand the emerging technologies out there that may meet the strategic needs of his company. Successful partnerships are defined by whether or not they fill a gap in ExxonMobil’s needs, rather than if they have a quick or sizable return on investment, he explains. Right now, he is most interested in startups that align with the core business offerings of ExxonMobil; support long-term energy transition objectives; or are connected to major trends like digital transformation, robotics, and artificial intelligence.
The Technology Scouting and Ventures group at Houston-based ExxonMobil — one of the world’s largest publicly traded international oil and gas companies — is only about three years old, but Zhao has already learned a few lessons about where startup-corporate relationships can go awry.
Too often, startups try to approach corporate relationships by pitching their ‘wonderful technology,’ rather than by honing in on specific problems it could solve for a business.
In a recent interview with InnoLead, Zhao shared what he considers the biggest challenges of working with startups and questions startups should be asking corporates before pitching a partnership. This interview with Zhao is a part of InnoLead’s most recent research project, “The Changing Landscape of Corporate-Startup Engagement,” which is sponsored by the MIT Industrial Liaison Program and MIT Startup Exchange.
Working at Different Speeds
“The biggest challenge is that a startup typically goes a lot faster than a larger company,” Zhao says.
While large companies like ExxonMobil are more focused on long-term goals, startups tend to operate on much faster timelines that prioritize quick wins and growth. This is true for a lot of large companies, he says, and the best way to work around it is through transparency.
Even though a startup may have an exciting technology to offer, its leaders may not understand specific industry needs and expectations, or what it actually takes to deploy a technology at scale. The technology is only a small part of creating a successful business; scaling requires taking the time to understand the market, business needs, customer needs, and where the business fits in.
“To really create business value, it’s a long process,” Zhao says. Large companies can help by leveraging industry knowledge to help potential startup partners navigate the process. “If you have a good, open, and transparent relationship [with an] open dialogue, then you have a better chance of [unlocking] value, [and finding] applications for the technology.”
The Three Questions Zhao Wishes Startups Asked Prospective Corporate Partners
Because startups and large companies seem to operate in different worlds, a good place to begin a relationship is by finding a common understanding of what problems need to be solved. Too often, Zhao says, startups try to approach corporate relationships by pitching their “wonderful technology” rather than by honing in on specific problems it could solve for a business. Below are the top three questions he wished startup leaders asked when initially meeting with corporates.
What does the decision-making process at your company look like?
What are the mega-trends that you are watching in your industry?
What are the pain points your company is trying to address?